SAN FRANCISCO – Business software maker Oracle Corp. is bidding $525 million for Retek Inc. in an attempt to thwart one of its fiercest rivals, Germany-based SAP.

Redwood Shores-based Oracle said yesterday that it will offer $9 per share for Minneapolis-based Retek, hoping to persuade the maker of retail software to reconsider a $496 million, or $8.50-per-share sales agreement with SAP.

Retek announced that it had accepted SAP's offer last week, prompting Oracle to jump into the fray even as it continues to digest its recently completed $10.3 billion acquisition of PeopleSoft Inc.

The news of a possible bidding war broke after the stock market closed yesterday, but investors indicated they expect the sale price to climb.

Retek's shares fell 30 cents to close at $8.59 on the Nasdaq Stock Market, then surged $1.36, or nearly 16 percent, in extended trading. Oracle's shares increased 2 cents to close at $13.62 on the Nasdaq, then shed 11 cents in extended trading.

Oracle's move underscores its escalating tensions with SAP, the world's largest maker of business applications software – the computer coding that automates a wide range of administrative tasks.

"This is going to make mud wrestling look like good wholesome fun," predicted AMR Research analyst Bruce Richardson.

By buying PeopleSoft, Oracle expanded its market share substantially, but the deal remained up in the air for 18 months – a period of uncertainty that raised customer anxieties and gave SAP a chance to position itself as a more reliable alternative.

In the two months since Oracle has completed the PeopleSoft takeover, SAP has continued its aggressive courtship of customers rattled by the changes.

The tactics have annoyed Oracle chief executive Larry Ellison, who described the Retek bid as a counterattack aimed at preventing SAP from gaining more ground in the North American software market.

Retek "is a much better fit with us than with SAP, from a technology standpoint and a market standpoint," Ellison told analysts yesterday during a conference call. Roughly 80 percent of Retek's 200 customers also have Oracle software installed on their computers, Ellison said.

Industry analysts are now wondering how badly two of the world's largest software makers want Retek, an industry niche player whose applications are tailored for retailers. Retek had just $174 million in sales last year. Oracle and SAP each generated more than $10 billion in revenue last year.

It's possible that Oracle is bidding for Retek simply to drive up the price that SAP ultimately will have to pay to complete the takeover, analyst Richardson said.

Oracle bought 5.5 million shares, or nearly 10 percent of Retek's stock, before launching its bid.